Performance, Commentary & Portfolio
ISIN GB00BNG2M159 | SEDOL BNG2M15
Fund Manager’s Review
Portfolio Overview
Allianz Technology Trust’s Net Asset Value (NAV) total return was 7.62% in November, compared to the Dow Jones World Technology Index return of 4.91%.
Technology shares were higher, due in part to Donald Trump’s decisive victory in the U.S. presidential election which boosted hopes of tax cuts and looser regulations. Within the sector, entertainment, IT services and software stocks notched double-digit gains, while semiconductors were only modestly higher and electronic equipment shares declined.
Monthly performance results outpaced the benchmark by a sizeable margin thanks to bottom-up stock selection and favourable allocation impacts. Relative gains were led by active overweight and stockpicking in software and entertainment segments, while short-term picks in semiconductors and a modest cash allocation, offset results for the month.
Contributors
Our active overweight allocation to Palantir Technologies Inc. a global leader in the field of data analytics, with a range of products and services, contributed to performance as shares rallied following earnings results, which cited a bullish guidance and expectations of higher margins. We slightly trimmed shares to lock in gains.
Shares of Spotify Technology SA, a provider of music and audio streaming solutions, advanced, thanks to expectations of secular growth in the company’s subscriber-led business model. We continue to hold the stock given its long runway for healthy revenue growth and margin expansion amid multiple tailwinds.
Our above-benchmark position to cloud-based customer relationship management platform HubSpot, Inc. aided performance following solid revenue growth in professional and enterprise-tier customers, supported in part by the company’s artificial intelligence offerings like content agent that helps personalize landing pages, videos and blogs.
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investor sentiment has improved following clarity around the U.S. Presidential election combined with strong bottomup fundamental factors in the sector |
Our exposure to cloud-based data monitoring and analytics provider Datadog Inc. and identity management platform CyberArk Software Ltd. also contributed to relative performance for the month.
Detractors
Shares of Monolithic Power Systems, Inc., a provider of semiconductorbased power electronic solutions, were lower following greater uncertainty over recent earnings results as well as overall headwinds with the semiconductor industry. We have a favourable medium-to-longerterm viewpoint on the stock and trimmed our exposure for risk reduction purposes, allowing us to redeploy capital into stocks with better near-term catalysts.
Our avoidance of cloud-based ecommerce platform Shopify, Inc. offset relative performance as the stock rallied following outsized earnings results, led in part by strength in enterprise merchants. We continue to not own the stock given expectations of better risk versus reward potential in other companies.
An active overweight allocation to Micron Technology, Inc. a leading provider of innovative memory solutions, offset results primarily due to the monthly relative underperformance of semiconductor stocks. We took advantage of the recent decline to increase our position given the company’s leadership position and long-term secular growth potential.
Our exposure to Latin American online marketplace MercardoLibre, Inc. and the avoidance of cloud-based customer relationship management provider Salesforce, Inc. also offset relative performance in November.
New buys and sells
Turnover in November was undertaken at a measured pace and reflective of changes post the U.S. Presidential election and earnings results, incrementally adjusting the portfolio based upon bottom-up fundamental factors. We newly purchased shares of point-of-sale, cloud-based restaurant management software maker Toast, Inc. given their market share gains and new product offerings. We bought mobile technology company AppLovin Corp., given strong growth and tools to market, monetise and analyse relationships app developers. We purchased Atlassian Corp., a designer and developer of an enterprise software platform for project management, collaboration and support services, as the company is expected to continue benefitting from product upgrades and migrations to their cloud offerings. We also added Celestica Inc. a designer and manufacturer of electronic components as well as Reddit Inc. a leading social networking platform. These new buys were funded in part by cutting our exposure to select semiconductor companies amid expectations of a near-term rotation out of the industry following strong performance and higher valuations, selling our stakes in ASML Holding N.V., BE Semiconductor Industries N.V. and NXP Semiconductors NV.
Outlook
The outlook for technology stocks continues to look incrementally more positive as investor sentiment has improved following clarity around the U.S. Presidential election combined with strong bottom-up fundamental factors in the sector. Overall corporate earnings have been relatively resilient, as most companies reported better-than-expected earnings and revenues for the quarter. Our expectation is that merger and acquisition activity may continue to rise as capital markets continue to show signs of strength. Amid the volatility, we are opportunistically looking to upgrade select names and add to our highest conviction ideas to better position the portfolio for improved performance.
Our focus remains on building the portfolio from a bottom-up perspective with a macro-overview. Technology remains a key enabler across almost every vertical industry and we will continue to seek stocks which solve difficult problems and can be long-term outperformers. Despite shortterm periods of higher volatility, earnings growth ultimately drives stock prices over the long term and in our view, we are still early in the spending trend supporting this dynamic segment.
Mike Seidenberg
12 December 2024
This is no recommendation or solicitation to buy or sell any particular security. Any security mentioned above will not necessarily be comprised in the portfolio by the time this document is disclosed or at any other subsequent date.
1.Calculated as 10% of outperformance against the benchmark, after adjusting for changes in share capital and will be capped at 1.75% of the Company’s average daily NAV over the relevant year.
2. As at the Trust’s Financial Year End (31.12.2022). Ongoing Charges (previously Total Expense Ratios) are published annually to show operational expenses, which include the annual management fee, incurred in the running of the company but excluding financing costs.
Registrations |
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Company No. |
03117355 |
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FATCA GIIN No. |
YSYR74.99999.SL.826 |
Codes |
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RIC |
ATT.L |
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SEDOL |
BNG2M15 |
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ISIN |
GB00BNG2M159 |
Awards & Ratings
Investment Week Investment Company of the Year Award 2021 – Specialist category
Allianz Technology Trust won this coveted award in November 2021, having also been a winner in similar categories in 2020, 2019, 2018, 2017 and 2015. This award recognises excellence in closed-ended fund management and highlights ATT’s consistent performance over time. The judging panel was made up of some of the UK’s leading researchers and investors in investment trusts and closed-ended companies, as well as several senior board members with many years’ experience in the industry.
Association of Investment Companies Shareholder Communication Awards 2021
Allianz Technology Trust won the Best Large Trust category, in recognition of its consistent, high achievement. The publication noted that ATT achieved the highest returns among this year’s award-winners (performance measured over three years to 31 January 2020), calling it “a worthy winner of our most prestigious sector award”. This accolade is an independent, statistical and qualitative assessment of ATT’s performance and highlights the Trust’s outperformance both in its class and against its peers.
Shares Awards 2020 – Best Investment Trust
Allianz Technology Trust was pleased to win ‘Best Investment Trust’ in The Shares Awards 2020. The awards were voted by readers of Shares and by the general public, making the award truly representative of the people who invest in the Trust and its peers. In presenting the award, Shares Magazine noted: “The technology sector had been in the ascendancy even before the events of 2020 but the global pandemic has super-charged this trend. We have been even more reliant on tech to tackle the day-to basics of work and home life. Staying in touch through video conferencing, ordering goods and food online and streaming entertainment to keep us entertained at home. Allianz Technology Trust is plugged into these themes and was voted Best Investment Trust in this year’s Shares Awards.”.
Kepler Growth Rating
Kepler Ratings are designed with investment trusts specifically in mind and aim to highlight those which they consider to be ‘best in class’ based on a clear, easy to understand set of quantitative tests. The selection system is entirely quantitative, setting aside all personal biases and views, looking at the universe in a purely objective way.
Morningstar Rating Allianz Technology Trust has a 5 star rating with Morningstar. This is a risk-adjusted, cost-adjusted comparison of fund performance within fund categories. The underlying methodology is robust and accounts for periods of volatility-downward volatility in particular-and also adjusts for fund expenses, including sales charges. That means the more expensive the fund is, the harder it will be for the fund to earn a high star rating.
A ranking, a rating or an award provides no indicator of future performance and is not constant over time.
Morningstar star rating © 2021 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.